Which of the Following Statements About ABC Inventory Classification Schemes

question 6

Multiple Choice

Which of the following statements about ABC inventory classification schemes is FALSE?

• A) "A" items typically represent the smallest group in terms of the number of items.
• B) As little as 10-20% of the items may account for 60-80% of the annual dollar use.
• C) "A" items often justify perpetual inventory recordkeeping.
• D) ABC systems typically have more than three classes.

---

Definitions:

Promissory Note

A written, legally binding promise to pay a specified sum of money to a designated person at a specified date or upon demand.

Compounded Semiannually

Interest calculation method that applies the interest to the principal balance and the accumulated interest twice each year.

Simple Annualized Yield

A calculation of investment earnings that does not account for compounding within the year, expressed as an annual rate.

Effective (Annualized) Yield

The effective, or annualized yield, calculates the return on an investment by taking into account the effect of compounding interest over a one-year period.